The distributed ledger technology is breaking the internet and probably is going to revolutionize and dramatically alter interactions between people, businesses and the ways we do what we do. It has the power to truly democratize a lot of things. Say, banking- take Bitcoin for example.
Bitcoin was Blockchain 1.0 and has nearly achieved what it was supposed to do. It has achieved near decentralization in the world of finance. I would not dare to call it a currency now but rather digital gold. Bitcoin may not achieve the currency status anytime soon looking at the current scenario- the latest segwit was abandoned as would probably know.
The scalability issues and limited flexibility to use bitcoin Blockchain for any “other” situations lead to the invention of Ethereum, Blockchain 2.0- thanks to Vitalik Buterin. Ethereum is unique as it has the Ethereum Virtual Machine (EVM) which is turing complete. Which allows it to compute anything computable. In Simple words- “you can write code on top of it and the Ethereum virtual machine can execute it”. But Ethereum also has its limitations. First one is scalability- the bitcoin has a throughput of 3-7 transactions per sec whereas Ethereum can give you 10- 30 Transactions per second. Second- Gas. There is a cost associated with every transaction in ethereum which means a code executed in the EVM will cost you ethers. The more gas price you are willing to pay, the quicker your transaction is going to be confirmed in Ethereum. This for me is a damp deal.
This is where IOTA fits in. IOTA is not Blockchain, it does not have the chain of blocks like bitcoin or Ethereum. IOTA uses the Directed Acyclic Graph or DAG which they call the “Tangle”. To quote the Tangle whitepaper, “To issue a transaction, users must work to approve other transactions. Therefore, users who issue a transaction are contributing to the network’s security.” What makes the Tangle more appealing is the absence of transaction fees. To create a transaction a node needs to approve another two transactions- That’s it!!! What this allows IOTA is something remarkable- It can make micro payments possible. That definitely is something that the IoT can leverage. In the machine economy, devices that can communicate with each other without significant costs associated with significant device to device trust and security is what is going to shape the future.
The Blockchain technology is at its infancy and there is a huge wave of advancements on its way. I believe that the Blockchain technology can create a better world through democratization of value exchanges. It is a revolution in motion.
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